4 Reasons Not to Be Scared of Cooperative Databases . . . and plenty of reasons to love them!

Cooperative databases have been around for some time now. More than 4 out of 5 non-profits are participating with at least one. Yet I continue to meet non-profits afraid to try them and most non-profits are still underutilizing this valuable resource.

We’ve seen the benefits of using cooperative databases for acquisition programs. But is your organization nervous about participating? If you aren’t using them yet, you could be missing out on one of the easiest ways to improve your fundraising.

How it works

Cooperative donor databases combine donors and giving history from multiple nonprofit organizations. In exchange for sharing your donors’ information, members of the co-op have the option to rent qualified prospect names from the database and even enrich their own donor file with predictive model scores that help them optimize contact strategy and campaign targeting.

Last year, I read an insightful white paper by John Ernst, chief strategy officer with Paradysz. His paper, “Co-op Watch,” highlighted the recent trends in nonprofit cooperative database usage and performance. Jon shares that co-ops accounted for nearly a quarter of all nonprofit acquisition names mailed in 2012 and their use continues to expand. As this service grows, you’ll find more and more reputable providers to choose from.

These co-ops identify the best new donor prospects. They study each donor’s giving history as well as their demographic profile, wealth assets and personal interests. Then they use models to detect similar donors in the database — clones — that will be a great fit for your next acquisition campaign.

Here are some other ways you can use the co-op to improve your marketing:

Lapsed donor reactivation scores

Warm-lead conversion scores

Ask optimization

Activist/volunteer recruitment

Major gift likelihood

Planned giving likelihood

Recurring gift likelihood

One such service provider also offers a product that can classify your donors into Loyalty Insights groups like “Not That Into You,” “Truly Connected,” “Best of the Best” and others that help you compare their level of support across organizations.

Choosing the right co-op service

My advice is simple. Test and use as many co-ops as you can in order to maximize results.

In fact, using more than one co-op could actually help you achieve deeper penetration of your prospect audiences, giving you the best chance to find more donors and raise more revenue.

You won’t find as much overlap as you might expect using multiple co-ops together. Because each co-op model uses slightly different criteria, our experience has shown that multiple co-ops can be used side by side in acquisition or reactivation campaigns with great success. By limiting yourself to one co-op, you’re probably ignoring an entire population of potential donors!

Imagine that reactivating donors is like fishing in one big pond of lapsed donors. You should first use your own segmentation to find the best group of lapsed donors. Then use a combination of other cooperative database models to find donors in all ends of your lapsed donor “pond.”

We’ve tested up to 4 different co-op models together and seen them all perform well!

“But I’m afraid of ‘sharing’ my donors”

With all these benefits, why would non-profits be scared of co-ops? It’s easy to be attracted to the idea of getting better acquisition results. Undoubtedly, as non-profits learn about working with co-ops, the biggest concern that often boils up is about “sharing” their donor information.

That concern is understandable and is always related to two key issues: Either non-profits make promises to donors not to share personal information, or they’re afraid that sharing their donors with other organizations will somehow undermine continued donor loyalty and support.

The solution to the first problem is to simply stop making those promises. It doesn’t improve acquisition results to say it and sharing their information could be the key to uncovering your next donor. As for donor loyalty, it’s wise to be protective. Donors are invariably the single-most valuable asset to a nonprofit organization but deciding not to participate in cooperative databases won’t actually protect your donors.

Let me give you the 4 most important reasons you should stop worrying about sharing your donors with co-ops:

1) The co-op database already has most of your donors in their list.

Wait, what did you say? Yes, that’s right — these databases are very large and they already house the majority of U.S. households that give to charity, so most of your donors are already being shared simply because they give to multiple charities.

When you share your names, co-ops primarily benefit by enriching the profile of each donor in the database. This additional insight will improve their ability to match up individuals with other non-profits they might want to support, including yours. It’s even possible that knowing your donors are more loyal to you than others will make them less likely to be shared with other non-profits.

2) Your unique donors are not always added to the co-op.

Co-ops usually only add names to their database if they give to at least 1 other organization. Sometimes even 3 or 4 organizations are required to get retained. Be sure to ask each co-op how they handle their name participation since terms can vary.

3) Contact frequency is controlled.

The most sophisticated co-ops control how often an individual can be rented from the list for prospecting. That limits both the number of organizations promoting them and the volume of communication they’ll receive during certain time spans. On average, a cooperative database name with Target Analytics Group is used no more than 4 times per year.

4) Withdraw your names at any time.

Most co-ops will allow you to take your names and information with you if you leave, so your participation is only required as long as you are also using from the services.

Make sure that you check all the terms and conditions for each co-op, since some rules can be different.

So there you have it. Let’s stop being afraid of these amazing tools and start seeing this shared information for the asset that it is. It’s a win-win strategy! If you are looking for some more advice on where to start with co-ops, please email me at scaldwell@masterworks.com.

If you have your own cooperative database success story, please comment and share it with us!